Stocks Rises as Fed Signals Rate Cuts Amid Tariff Threats

U.S. stocks ended higher with the Dow up 123 points while the S&P 500 hit a record. Trump's tariff threats on Mexico, Canada and China add uncertainty but the Fed's stance on rate cuts supported investor optimism.

The Dow ended the day up 123.74 points (0.3%) at 44,860.31. The S&P 500 also climbed 34.26 points (0.6%) to a record closing high of 6,021.63 while the Nasdaq rose 119.46 points (0.6%) to 19,174.30.

Trump announced a 25% tariff on all products from Mexico and Canada, blaming them for illegal immigration and drug influx, particularly fentanyl. He also plans a 10% tariff on China for not curbing drug shipments. Treasury Secretary Bessent supports gradual tariff increases.

Stocks rose as Fed minutes revealed plans to gradually lower interest rates if inflation reaches 2% and the economy remains near full employment. The Fed stated that monetary policy decisions will depend on economic conditions and the evolving outlook and risks.

Software stocks performed strong driving the Dow Jones U.S. Software Index up by 1.4% to a record closing high. Utilities and pharmaceutical stocks also saw considerable strength, with the Dow Jones Utility Average and the NYSE Arca Pharmaceutical Index climbing by 1.3% and 1.2%.

Housing stocks fell with the Philadelphia Housing Index down 1.8% after October's new home sales dropped. Oil service, airline and computer hardware stocks also weakened, offsetting gains in other sectors.

Asia-Pacific and European stocks mostly fell with Japan's Nikkei down 0.9%, China's Shanghai Composite down 0.1% and major European indexes including France's CAC 40, Germany's DAX and the UK's FTSE 100 also lower.

In the bond market, treasuries gave back ground after soaring in the previous session. Subsequently, the yield on the benchmark ten-year note which moves opposite of its price, rose 3.7 bps to 4.30%.

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